Greek debt deal 'this weekend', reckons Rehn

‘They're about to close a deal, if not today maybe over the weekend, preferably in January rather than February,’ he told his audience at the World Economic Forum in Davos. Not much room for misinterpretation there.

Of course we have heard this kind of thing before, without result. Talk between the Greek government, its creditors and the ECB have been stalled for weeks - largely over the issues of how big a haircut private investors are willing to take on the Greek debt they hold, and whether public creditors (ie, other governments) should also share the pain. Given the enormous pressure on the whole EU machine that the Greek crisis continues to exert, it’s even possible that Rehn has resorted to trying to force the negotiators hand by pre-announcing their ‘success’.

But that would be a pretty risky move. The consensus seems to be that Rehn has had a tip-off that progress is finally being made and has decided to spread the glad tidings in order to relieve the strain on the markets (and on his EU colleagues) ahead of the weekend. And if his words ‘encourage’ those around the table to come to an even firmer decision then that’s all to the good.

Greece of course needs a deal if it is to get its hands on the next tranche of bailout dosh, without which it will be unable to meet debts payments due on 20 March. Private lenders - mainly banks - have apparently decided that, at 50%, they have taken about as much of a scalping as they are willing to accept. The rumour is that the deal about to be announced will square this circle by dangling the carrot of upgraded interest rates for creditors once the country gets back on its feet in return for a bigger upfront cut initially.

If agreement is not reached, Greece would be free to make its own decisions on how much to repay - since that would not be very much at all, this would amount to a default and the probable exit of Greece from the Euro. For some (not least within Greece itself) that has come to be seen as the least worst option, but given its potential to bring the whole eurozone tumbling to the ground that is not the view of the powers that be in Brussels.

So however good the source of his information, Commissioner Rehn is likely to be spending the weekend with his fingers crossed.